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Business News/ Opinion / The rising agrarian distress in India

The rising agrarian distress in India

To stabilize crop prices and make them remunerative, the Swaminathan Commission proposed significant improvements in the implementation of MSPs

Investment in agriculture and related areas has fallen as a share of public spending. Photo: PTIPremium
Investment in agriculture and related areas has fallen as a share of public spending. Photo: PTI

Across the country, farmers are furious—and rightfully so. Four years ago, they helped bring the Bharatiya Janata Party (BJP) to power, believing Narendra Modi’s claims that they would no longer suffer official neglect. But since then, conditions in agriculture have got worse. Earlier problems have worsened as farm incomes have been squeezed by slower output growth, higher costs and increased vulnerability to a changing climate. And there is a slew of new problems resulting directly from government policies.

In retrospect, it is quite remarkable that the rampant and rising agrarian distress of the mid-1990s to mid-2000s did not lead to more farmers’ protests. Instead, there was a surge in farmers’ suicides, especially in dryland regions, and a significant rise in short-term distress migration.

But farmers certainly played a role in the loss of the National Democratic Alliance (NDA) government in 2004, and the first United Progressive Alliance (UPA) regime sought to meet some of their concerns through an increase in public spending in rural areas, including through agriculture component plans in each state, a focus on agricultural credit and enhanced extension activities, and the rural employment guarantee scheme, which was used extensively by workers from small and marginal farmer households. These were relatively limited measures, but they nonetheless marked a shift in the direction of policies, which was aided by the global recovery in agricultural prices.

Even though the National Commission on Farmers, better known as the Swaminathan Commission, was set up by the UPA regime, there was no real effort to implement its recommendations, and the second UPA tenure did nothing to take these ideas forward. They may have been too politically contentious and economically demanding to be adopted within the neoliberal economic paradigm. 

After all, the commission proposed extensive land reforms: including distributing ceiling surplus and waste lands, preventing diversion of prime agricultural land and forest to the corporate sector for non-agricultural purposes, and ensuring grazing rights and access to common property resources. It argued that higher productivity in agriculture could only be achieved with substantial increases in public investment, especially in irrigation, drainage, land development, water conservation, and promotion of conservation farming and biodiversity. It proposed comprehensive groundwater and surface-water management, to give all farmers sustained and equitable access.

The commission emphasized the expansion of formal credit outreach to the poor and needy in rural areas; reduction of interest rates on institutional loans to 4% simple interest (with government support), a moratorium on debt recovery, including loans from non-institutional sources, and the waiver of interest on loans in distress areas and during calamities. On the insurance front, it suggested that an integrated credit-cum-crop-livestock-human health insurance package should cover the entire country and all crops, with reduced premiums, along with an agriculture risk fund to provide relief to farmers after natural calamities.

There were specific recommendations for women farmers, not only for joint landholding pattas, but to recognize women as farmers for kisan credit cards and other programmes of the Central and state governments. To stabilize crop prices and make them remunerative, the commission proposed significant improvements in the implementation of minimum support prices (MSPs), and effective extension to other crops, including millets and other nutritious cereals. The recommendation that the MSP should be at least 50% more than the weighted average cost of production was made in this report. 

These recommendations were both comprehensive and detailed—so now no government can claim that it doesn’t know what to do about agriculture. What the UPA government could not or would not do, the BJP in 2014 promised to do, so much so that its electoral manifesto lifted large chunks from the Swaminathan report. The ruling party must now be ruing that decision, because it has been even less able to implement any of the proposals than the previous government. 

Take the MSP: This government has actually provided significantly lower margins over costs for most crops than the UPA regime. The promise to provide 50% over costs (announced yet again in this year’s Union budget) seems like a slap in the face when the clarification comes that this refers only to paid out costs plus family labour’s imputed costs. Public investment in agriculture and related areas has fallen as a share of public spending, and the promised increases in crucial areas are nowhere in evidence. The expected improvements in crop insurance have also not materialized, unsurprising since the expenditure on it is pitiful. Farmers reeling under dry spells or sudden hailstorms that destroy standing crops are provided no compensation for losses. 

The sins of omission have been compounded by sins of commission, as demonetisation destroyed rural markets and demand for farmers for a prolonged period, and the imposition of the goods and services tax added to their cultivation costs. Livestock rearing, which has saved farmers from penury and now accounts for nearly a third of agricultural value added, is under threat from cow vigilantes who are allowed to run riot. No wonder farmers across the country feel betrayed. 

Jayati Ghosh is a professor at the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University.

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Published: 28 Feb 2018, 01:16 AM IST
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